Yesterday, Huawei and ZTE filed a joint reply brief in support of their respective motions to expedite determination of the terms of a FRAND license for InterDigital’s standard-essential patents. The parties reiterate their willingness to take a FRAND license to InterDigital’s patents and assert that a prompt resolution of FRAND issues will moot other issues and litigation and will prevent Huawei/ZTE from facing irreparable harm.
Huawei/ZTE rely heavily in their brief on the road taken by Judge James L. Robart in the Microsoft v. Motorola W.D. Wash. case, and distinguish their situation from the Apple v. Motorola W.D. Wis. case. Noting that in the Wisconsin case, Apple did not unconditionally commit to taking a FRAND license to Motorola’s patents (it set a ceiling of $1 per unit), Huawei/ZTE offer to provide sworn statements from corporate officers evincing an unconditional guarantee here. Huawei/ZTE liken their situation to the Microsoft-Motorola situation, where Microsoft committed to the Washington court that it would take a RAND license to Motorola’s 802.11- and H.264-essential portfolios. And because Judge Robart prioritized the RAND determination in that case, Huawei/ZTE assert that the Delaware court should do likewise here.
Huawei/ZTE also stress the potential for them to face irreparable harm through an ITC exclusion order. Explaining that InterDigital has asserted standard-essential patents in not one, but two ITC actions (Inv. Nos. 337-TA-800 and 337-TA-868), Huawei/ZTE claim that “InterDigital has made perfectly clear that it intends to perpetuate an endless cycle of ITC litigation against Huawei and ZTE.” Huawei/ZTE claim that this is because InterDigital wants to be able to use the leverage of injunctive relief (i.e., an exclusion order) in licensing negotiations to drive up the final royalty rate — and under the eBay standard, InterDigital would be hard-pressed to receive an injunction for infringement of SEPs in district court. Huawei/ZTE claim that only a determination of the appropriate FRAND royalty rate for InterDigital’s patents can stop the potential for repeated Section 337 investigations and exclusionary threats.
Lastly, in another nod to the Microsoft-Motorola case, Huawei/ZTE make an alternative request: if a FRAND determination is not expedited, the district court could enjoin InterDigital from obtaining an ITC exclusion order until the FRAND proceedings are complete. This is very similar to the path that Judge Robart took in enjoining Motorola from enforcing its injunctions in Germany over two H.264-essential patents (a ruling which he later expanded to apply to all of its H.264- and 802.11-essential patents anywhere in the world).